UK Energy Prices are Plunging, But Users are Facing Rate Hikes
In this newsletter:
1) UK Govt Punishes Voters As Costly Climate Policies Drive Up Electricity Bills
Bloomberg 4 March 2020
2) With The Economy On The Brink, UK Government Prioritises Its Climate Agenda
Financial Times, 4 March 2020
3) John Constable: The Government's Murky Wind Subsidies Revival Is A Costly Blunder
The Daily Telegraph, 3 March 2020
4) Conservative Party Activists Don't Believe There's A Climate Emergency
Guido Fawkes, 2 March 2020
5) Climate Hysteria: Modern Doomsday Cult Is Threatening The Mental Health Of Millions Of Children
Reuters, 3 March 2020
6) Sea Level Rise Was A Constant Phenomenon Even Before Industrialisation, New Study Finds
International Business Times, 2 March 2020
7) And Finally: Coronavirus And Migration Crisis Shows Need For ... Climate Law, Says EU Official
The Guardian, 4 March 2020
Full details:
1) UK Govt Punishes Voters As Costly Climate Policies Drive Up Electricity Bills
Bloomberg 4 March 2020
Electricity bills are headed higher for British households even though costs in the wholesale market are falling, a phenomena that one utility blamed on the government and grid operators. Grid costs are set to increase even more. Last year, the U.K. became the first major country to target net-zero emissions by 2050.
Bulb Energy Ltd. became the first energy supplier to raise its prices, citing higher network and policy costs. It blamed a 3% increase in the charges it pays for grid maintenance and expansion for the higher consumer rates.
Other suppliers will be facing similar pressures and are likely to raise prices too, said Stephen Murray, an energy specialist at MoneySuperMarket, a price comparison provider.
Suppliers usually make price changes in early April, Murray said. “I don’t think Bulb will be on their own.”
The amount that energy companies charge customers for power and gas has come under intense scrutiny in Britain with the energy regulator, Ofgem, enforcing a cap on the amount that customers on default tariffs have to pay.
With wholesale power prices 32% lower than a year ago consumers may struggle with the idea of bills rising.
Bulb’s justification is fair as policy and network costs are rising, according to Dan Starman, a consultant at Cornwall Insight Ltd. A model by Cornwall that includes 12 different charges on the domestic electricity bill shows these costs are expected to go up by about 6% year-on-year.
Bulb, a small energy supplier with 1.6 million customers, lowered its retail gas prices Monday due to “significant falls in wholesale costs.”
Overall, a typical member using both electricity and gas will save 56 pounds per year. A typical member who only uses electricity will see an increase of 22 pounds per year.
Grid costs are set to increase even more. Last year, the U.K. became the first major country to target net-zero emissions by 2050. This will require the electrification of heating and transport causing a huge boost in demand. It’s likely that some policy intervention will be needed as falling gas costs will drive customers to use more of the fossil fuel rather than switch to greener options.
Full story
2) With The Economy On The Brink, UK Government Prioritises Its Climate Agenda
Financial Times, 4 March 2020
Chancellor Rishi Sunak will next week use his Budget to signal the end to a decade of freezes on fuel duty, as he announces a raft of measures intended to help Britain meet its climate change targets.
As the first stage Mr Sunak will scrap the £2.4bn diesel subsidy for users of farming and construction vehicles — part of what government officials say is a wider package of green taxes to help Britain achieve net zero carbon emissions by 2050.
But those close to the Budget preparations have not ruled out the possibility of Mr Sunak also ending the freeze on fuel duty for all motorists next week, or at least foreshadowing the end of a policy dating back to 2010.
Conservative MPs have fiercely resisted an end to the freeze on fuel duty, but some admit the policy is nearing the end of its life. One Tory MP admitted: “I can’t imagine the freeze will survive this parliament.”
Mr Sunak wants to raise fuel taxes to send a signal to manufacturers and consumers to accelerate the switch to electric vehicles, even though similar moves in France spawned the protests of the “gilets jaunes” movement. More expensive diesel will be a blow to farmers — also braced for cuts to subsidies after Brexit — who have no options yet available to switch to alternative fuel vehicles.
Full story (£)
3) John Constable: The Government's Murky Wind Subsidies Revival Is A Costly Blunder
The Daily Telegraph, 3 March 2020
In the world of renewable energy nothing is what it seems. “Environmentally friendly” turns out to be devastating to the natural world. “Cheap” is expensive. “Local support” is found to be at a distance. “Sustainable” is, strange to say, short lived and unaffordable. A “contract” is non-binding. “Secure” is actually unreliable. Love is hate, black is white, and “Green” is a murky shade of brown.
So we should not be surprised when we are simultaneously told, as we were yesterday by government, that onshore wind is now so cost competitive it should be allowed to apply for subsidies again. It is quite usual for the wind industry, and their ministerial enablers, to be wreathed in smoke, surrounded by mirrors, and speaking in riddles.
But what is actually going on? Who is doing what to whom? A complicated game of bait and switch is what is going on, and the consumer is getting a poor deal. Here’s the background and how it works.
Since 2002 renewable electricity in the UK has received £38bn in subsidy from one scheme alone, the Renewables Obligation. The wind industry is the largest recipient, with onshore wind taking £10bn and offshore wind over £12 billion in subsidy since 2002. Big money.
The annual cost of all renewables subsidies now stands at £10bn a year, rising to £12 billion a year in the middle 2020s, when it will start to fall as existing subsidy entitlements expire.
The threat that this cumulative cost would spiral drove the Treasury in 2017 to argue for the closure of existing mechanisms to new entrants, and a moratorium on fresh schemes. They’d had enough.
But the industry hadn’t, and, in spite the rhetoric, the renewables sector is not keen to go subsidy free. Indeed, the physical thermodynamics of wind and sun mean, in my view, that it never will be competitive with fossil fuels or nuclear.
Wind and sunshine are very low-grade energy, close to random heat, and require vast and vastly expensive correction before the output is suitable to power a modern economy. This makes them intrinsically expensive.
That is why their capital costs haven’t fallen much, if at all, over time, and why it is so costly to balance an electricity grid in the presence of renewables, up from £367m a year in 2002, pre-renewables, to £1.5bn in 2019. Turning a sow’s ear into a silk purse is difficult.
But it’s the capital cost which is relevant to the economics of these schemes. Data from audited accounts shows that both onshore and offshore wind are still much more expensive than conventional generation. The capital cost of onshore wind has been stable since 2011 at about £1.5m a megawatt. A Combined Cycle Gas Turbine costs less than half that and is twice as productive. Offshore wind has seen some reduction, but still stands at about £3m a megawatt.
So renewables need subsidy, but government is currently unwilling. Fortunately for the industry, revenues from existing subsidies are so large that they can survive in the short term. The idea that their costs have fallen is the 'bait'. Hence, the uneconomic bids for Contracts for Difference, and the implausibly low prices given for onshore wind in yesterday’s government announcement. In spite of their name, Contracts for Difference aren’t actually binding futures contracts, and the industry regards them as low cost “options”, giving them good PR and a favourable market position.
Now for the “switch”. When a greenwash thirsty government is heavily committed to a wind powered future, the industry will ask for new income support subsidies, or a carbon tax, or government pressure encouraging commercial consumers and government bodies into Power Purchase Agreements at high market rates for long periods.
That seems to be the wind industry’s plan, and a very good plan it is, for them. But why is this government playing along? The short-term Thunberg-appeasing gain is trivial compared to the threat. This is bad politics, as the public is generally not keen on onshore wind, and it’s bad economics, since high electricity costs rule out post-Brexit prosperity. And for both these reasons it’s an unsustainable environmental policy. There is no real dividend here for Mr Johnson or his government. Yesterday’s announcement was a blunder.
4) Conservative Party Activists Don't Believe There's A Climate Emergency
Gaia Fawkes, 2 March 2020
ConservativeHome’s regular survey of activists asked them what they thought about the so-called “climate emergency“. By a margin of more than 2-to-1 (of those who expressed a preference) they said there is no climate emergency. The astonishing thing is that a third of Conservative activists have fallen for the hype…
The media-generated hyper-reality that we are experiencing resembles the period when fears of nuclear war in the late 80s peaked. A genuine fear of the cold war turning into a nuclear war became all-pervading in the media. Fictional depictions of nuclear Armageddon became common place on television and in Hollywood. Children became fearful and were deployed heavily in protests and propaganda. The prospect of nuclear annihilation was the fault of capitalism, the neutron bomb was a particularly “capitalist bomb”. Just as capitalism is blamed for the “climate emergency”. The difference with today is that a third of Conservatives didn’t fall for that hype…
5) Climate Hysteria: Modern Doomsday Cult Is Threatening The Mental Health Of Millions Of Children
Reuters, 3 March 2020
One in five children are having nightmares about climate change, according to a British survey on Tuesday, as students globally stage protests over a lack of action to curb global warming.
About 17 percent of children in Britain said worries about climate change were disturbing their sleep while 19 percent said these fears were giving them nightmares.
The survey of 2,000 children aged eight to 16, conducted by pollster Savanta-ComRes for BBC Newsround, also found that two in five, or 41 percent, did not trust adults to tackle the climate crisis.
Over the past year, millions of young people have flooded the streets of cities around the world demanding political leaders take urgent steps to stop climate change, inspired by 17-year-old Swedish activist Greta Thunberg.
Emma Citron, a consultant clinical child psychologist based in London, said young people were clearly fearful about climate change with the survey finding 58 percent were worried about the impact that climate change will have on their lives.
Full story
6) Sea Level Rise Was A Constant Phenomenon Even Before Industrialisation, New Study Finds
International Business Times, 2 March 2020
A study by the University of York found evidence for a period of enhanced pre-industrial sea-level rise of about 2-3 millimetres per year in three locations — Nova Scotia, Maine and Connecticut, which were largely natural, without any human constructions or man-made factors.
Figure 1. Relative sea‐level reconstructions for Chezzetcook (Nova Scotia), Sanborn Cove (Maine), Barn Island (Connecticut), all from this study, New Jersey (Kemp et al., 2013), North Carolina (Kemp et al., 2011), and Viðarhólmi (Iceland) (Gehrels et al., 2006; Saher et al., 2015) and tide‐gauge records (Holgate et al.,
2013).
These three locations are partly related to the North Atlantic Oscillation – a large-scale atmospheric pressure see-saw over the North Atlantic region – and to periods of enhanced ice melt in the Arctic, said the authors of the study, whose findings are published in Geophysical Research Letters.
The authors of the study say cities like New York and Boston will have to take into cognizance this natural variability that may affect these cities in the future as well. The team found sea level reconstructions based on salt-marsh sediments from the Atlantic coast and from microscopic salt-marsh fossils. Salt-marshes are good “archives” of sea levels as they contain several metres of sediment which contains data going back hundreds of years.
Faster than global average
Previous studies have shown that, since the 1950s, rates of sea level rise along the Atlantic coast of North America were faster than the global average – leading to this region coming to be known as a sea level rise “hotspot.”
However, lead author Prof Roland Gehrels, from the University of York’s Department of Environment and Geography, said this earlier rapid episode of sea level rise in the 18th Century wasn’t known before. To find out what global warming is doing to sea levels today, the team examined the base level from historical times.
“In the 20th Century we see rates of up to three or four millimetres per year, faster than in any century in at least the last 3000 years. In the 18th Century they were slightly slower, but still much quicker than you would expect for the Little Ice Age, partly because the Arctic was relatively warm during the 18th Century,” he noted.
No human factors in pre-industrial era
It was a pre-industrial phenomenon, so there were no anthropogenic forces – or human influences, he explained. In the 20th Century they might have played a key role but well before the industrialization, those rapid episodes of sea level rise on the north east coast of North America in the 18th Century might have been caused due to natural causes, he said.
Full story
7) And Finally: Coronavirus And Migration Crisis Shows Need For ... Climate Law, Says EU Official
The Guardian, 4 March 2020
Tensions at the Greek-Turkish border and the coronavirus show why the European Union needs a climate law that binds member states to net zero emissions by 2050, the EU’s top official on climate action has said.
Frans Timmermans, a European commission vice-president who leads on the climate emergency, said the different crises facing Europe underscored the need for a climate law in order not to lose track of reducing emissions.
The long-awaited climate law unveiled on Wednesday is the centrepiece of the European Green Deal, a plan to transform Europe’s economy, promised by the European commission president, Ursula von der Leyen, within her first 100 days.
“It will be our compass for the next 30 years and it will guide us every step as we build a sustainable new growth model,” Von der Leyen said announcing the law.
Some political leaders have argued that the commission needs to focus on the protection of the EU’s external border, rather than the climate crisis – arguments that Timmermans rejected. “The focus this week should be completely on the happening in Syria, in Turkey and what is happening in Greece, should be on containing the coronavirus and solving it. That’s absolutely a priority,” he said. The climate law was “so important”, because “it allows you to focus on other things without losing track of what you need to do to reach climate neutrality”.
Full story
The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.
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